EnergyFactor By ExxonMobil | Pespectives has a new home

Is the clock ticking for LNG exports?

Next week the Senate Energy & Natural Resources Committee plans a hearing highlighting the economic benefits of exporting natural gas, including promoting manufacturing and creating high-paying jobs.

The timing is welcome – and Obama administration officials would be wise to pay attention – because, according to a number of experts, the clock is ticking for U.S. LNG exports.

NatGas_Clock_03-2014“Time is of the essence,” Wood Mackenzie energy analyst Asish Mohanty told a recent Platts conference on LNG.

He explained that the backlog of export applications awaiting government processing threatens the ability of U.S. companies to capitalize on the strong international demand for abundant natural gas from America’s shale fields.

Mohanty’s presentation was written up in a comprehensive article in industry publication RigZone that serves as one of the better pieces I’ve seen laying out the myriad issues surrounding the LNG export-application process.

What Mohanty made abundantly clear is that there is a limited window of opportunity for U.S. natural gas producers to help serve the needs of gas customers around the world. And that window is closing fast.

The frustrating part is that the only thing standing in the way of taking advantage of these commercial opportunities is a federal regulatory apparatus that has slowed approvals of LNG export applications to a crawl.

Federal officials have given no convincing explanation for what is taking so long – only six proposed projects have been approved by the Department of Energy, while more than two dozen continue to await action. (Some of these applications were filed more than two years ago.) And none of the companies waiting for approval has any concrete idea of when DOE will get around to processing its application.

The U.S. has certain advantages over potential competitors, the article notes, from lower delivery risk to better access to labor and other resources to an extensive pipeline network and multiple supply sources. To that list I would add a strong rule-of-law and governance environment.

But those advantages are in danger of being squandered by unnecessary regulatory delays.

The White House makes no secret of its belief in the benefits of free trade, saying, “Trade is critical to America’s prosperity – fueling economic growth, supporting good jobs at home, raising living standards and helping Americans provide for their families with affordable goods and services.”

The administration should back up those words with prompt action on LNG exports.

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